Forum Replies Created
Hi Steve,
And thanks – some worthwhile reading there. And yes, I recall hearing that the Govt lobbies drug companies too – so perhaps that $300k per year was negotiated down to $200k, which then exceeds the current “statistical value per year” of an Australian life.
That second link has a host of interesting thoughts within. It is very much a TLDR link, but I stuck it out for most of the journey. ;)
And one gem I caught in the third link was in the Comments section – one wag mentioned that we “do a wallet biopsy prior to deciding to pay for expensive surgery” (he was a US citizen where hospital care costs the patient, or their insurer).
Your answers provided me with the answer I was seeking though, so thanks – i.e. the current “value of an Aussie life” seems to be around $5m one-off, or $220k per year, whichever is applicable. That goes some way to adding value to this earlier post of mine:-
In there, the link shed light on one estimated value of $330m per Covid life saved, which seemed abnormally high to me – your links above now gives more credence to my original post that had questioned the sense of such decision-making. $5m is quite a discount on $330m !!!
Regards,
Benny
Hi psaini,
Do you have Steve’s book “0 – 130 properties in 3.5 years” at all? If so, and it is the 2009 version (the update), go read chapter 9. It gives a really good writeup of just how and why Steve uses companies and trusts. He tells me too, that the same system works for both resi and comm – but NOT if negative geared. The latter would need a complete rethink.
If you don’t have it, do yourself a favour and just buy it (for less than a night at the movies) – https://www3.propertyinvesting.com/0-130-properties
hope that helps,
Benny
Hi Dissanayake,
Sounds like some good news for you. Re this comment – “Now I can cover my loan and good return.” – were you not covering your loan previously? i.e. was it negative geared? Was it like that when you bought initially?
Morning expansion between Emerald and Backwater would impact the markets.
I wonder about that comment – was this “mining expansion” that you were referring to? If not, please explain the sentence.
Thanks, Benny
Hi Daniel,
I hesitated to add my thoughts for a couple of reasons – 1. because I have never done a subdivision before, and 2. I don’t know Victoria. But, since no-one else with more experience has stepped in, I thought I’d have a go. If nothing else, my thoughts might help you to choose your path, based on the questions I ask.
First off, with that size of block, I suspect you would have NO problem subdividing it. But could it even become three blocks? Also, if selling, you would likely have to have subdivided the block already – or have you already done that? If yes, then have you considered getting a DA prior to offering it for sale (I have heard this can add value to the buyer/builder – but it also can add delay at your end – just a thought).
If you HAVEN’T already subdivided, maybe check with a Town Planner to see what your options are (i.e. should you subdivide into two or three blocks, maybe consider building a duplex rather than just a single dwelling on the second block, etc). In the end, the “numbers” will tell you what is the financially best answer for you. As well as that, can you afford the TIME it would take to accomplish all of the above (depending on which way you jump)?
Consider too, Steve’s sage mantra – make the most money in the quickest time with the least risk and lowest aggravation. i.e. the “most money” way might well be to attempt to build a duplex on the second block, but that has an effect on the “time, risk, and aggravation” parts of the equation. Would you be up to handling those? Or is it better to “quit this one quick” and go ahead with the Adelaide option?
Good luck with your decisions, :)
Benny
Hi Nalin,
I think you need the advice of a Lawyer or an Accountant for that one. There are one or two things that would be advantageous to do, relating to the fact that you are now in the property personally. I’ll leave it to someone else to go through the ins and outs, as I don’t have all the knowledge, nor the requisite licencing to help you,
Benny
Hi TG04,
I had a look at that page, and it appears to me that those comments should have referred to after-tax income, not pre-tax.
As you say, there is no way you could cover 100% of pre-tax income using after-tax monies. Well spotted,
Regards,
Hi Andre,
Welcome aboard. :) “The worst thing you can do is nothing”. Phrases like that are often accompanied by solicitations to buy whatever a promoter has to sell. i.e. It can be a marketing ploy to nudge you into action. Diving in and hoping for the best is also not recommended. But, it is good to hear you have saved a deposit and are considering your next move.
Re “this obviously isn’t the best time to be starting my property journey” is an interesting phrase too – what do you see that has you say that? What it tells me is that I am glad you are asking for ideas from others as any time can be a good time if you find a good investment. So HOW do you do that?
I believe the main way is to educate yourself by poring through forums such as this one, picking up knowledge from those who have been there and done that. Reading investing books is worthwhile too. If you haven’t already, check out the “Training” link at the bottom of each page where you can purchase Steve’s books – his writing style is easy-to-read, but the information he shares is invaluable. Also, spend some dollars on seminars, webinars, etc to grow your “investing IQ”.
And, one important and timely note, DO join up for Steve’s up-coming webinar (see note at top of page in Red highlight) where he is going to update us on the current state of the markets in Australia – it arrived in my inbox yesterday. Perhaps you got it in your email too, but if not, click on that red bar above.
Other than that, think on Steve’s maxim – that the objective of investing is “to make the most money in the least time, with the least risk and the lowest aggravation”. Of course, in his books he expands on that simplistic maxim – it is more a memory-jogger than a creed to live by. But once you have educated yourself, that simple line can help you to stay focussed.
Good luck with your learnings, and do come on back if you have more questions,
Benny
Hi dablackkid,
One IP is a good start – not too many even do that. Do you have a question for us? Anything we can help you with?
Benny
Can someone point me in the right direction where to get some solid data/information to prove that year-on-year rents went up 18/19% in 2020-2021.
Hi Mark,
Since I live in Brisbane, I was interested to see for myself. A quick look around on Google showed me that most sources have called a 9% to 10% rental increase. This seems to fit with DHA’s response to you.
But then, I have heard that VALUES have increased at around the 20% mark.
The article you linked showed this – “The Sunshine Coast had Queensland’s largest year-on-year increase in weekly rents, up 18.8 per cent.” And other sources showed that some Regional areas went up 15%, but overall, the rental lift was nearer 10% for most areas.
Benny
Hi Dean,
There are plenty of folk on here who could perhaps answer you better than I, but here’s a few thoughts anyway….
1. That equity (if your situation allows you to borrow it – DSR, etc) can be all used on one property, or perhaps provide deposit and costs for more than one. Your borrowing capabilities would be the limit on what you might be able to do.
2. Give some thought too, to whether you would go IO (Interest Only) on the loans or P&I (paying off both Principal and Interest). There are other ways to research that might steer you to “the best way for you” e.g. check out Offset Accounts. Talk to your financier/broker about these “best ways”, or come back here to ask for more.
3. Do you have a goal in mind re your investing? i.e. Do you plan to accumulate several IO’s over time? If so, then take a look at structuring to see which way is best for you (e.g. borrow under a Trust, a Company, or in Personal Name).
4. Really, there is SO much that needs to be answered. Have a read around, check out the Training Centre (see the Home Page) and read up on some of the useful information that is within this site. I’ll be sending you a PM shortly – check out the links within it – especially the “big Picture” topic.
Not too many answers for you – perhaps more questions that might lead you to think from other angles. :)
Benny
A further year has passed, and what a year. Early projections made when Covid first hit were saying that housing values would fall. And I can see why that was said:-
1. With immigration stone dead due to covid, no new housing for them would be required. Also, businesses and jobs were affected massively – the Fed Govt had to shore up the finances re supporting those out of work suddenly. Restrictions re our activities and a massive change re any vacations led to major repercussions in all directions.
2. The above uncertainty fed through to many who simply “battened down the hatches” to wait out this world pandemic rather than to consider moving house.
3. Property viewings with RE agents couldn’t be done en masse – each person wanting to view a property had a private viewing to minimise the spread of Covid. Point 2 perhaps even reduced the number of potential viewers anyway. Values were seen to drop gradually.
4. Many jobs were encouraged to be “done remotely” so folks set up their homes to accommodate this switch. Travel was lessened, fuel prices dropped, schooling was also (often) done from home – this made many consider “staying put” even longer, taking demand for property lower.
Later on though, other factors came into play that have led to values booming once more. Looking at Corelogic’s National Update https://www.corelogic.com.au/housing-update, it shows just five months since July 2019 that were nett loss months for house values. Those were the months of Apr2020 thru to Aug2020.
With Covid19 starting in earnest in early 2020, the winds of optimism were cold at first – but since Sep2020 to current day (Dec21) there have only been upticks in values each month. Each of these were greater than 0.5% per month (6% per year) and have an average above 1% per month (>12% per annum).
Why? I’m sure the rapid printing of money has had a huge effect on the whole world, thus prices of assets has to rise to offset the drop in value of the currencies. Also, with vaccines now allowing more folk to “go about their business”, this has allowed commerce to get working again. Likely too, that the initial fear in 2020 of this “100 year pandemic” had many thinking this could be a repeat of the dreadful Spanish Flu that killed an estimated 50 million people out of a total population of 1.8billion. This fear stopped the world in its tracks until we understood more about the real effects of Covid-19.
As of today, the total deaths from Covid19 have been 5.5 million, from a world population 5 times greater than that of 1918 when 50m were killed. Also, as Covid goes on, the succeeding strains have appeared to be less severe, thus leading to more confidence all round. This confidence can only help the world economy recover.
Could it be too, that Australia’s remoteness relative to much of the world makes our country more desirable for many folks’ futures once the world “opens up again”? Could this be adding to the dollar values of existing properties even now? Certainly hope is now higher than it has been since Covid came along.
I’m sure there are MANY other factors at play…. What would these be? Anything coming that would lead to another crash? I’m not seeing it yet, but another major world event might be what’s required to topple the Aussie market. What do YOU think? Have a go, ;)
Benny
With two more years having passed, I thought it worthwhile updating you all with some hopeful news. Again, as a retiree I don’t travel so much as in the past – typically a tank of petrol will do me for a week or so. Any of you who HAVE to fill more regularly may not see the same benefits. But here’s my summary as of Dec 31 of 2021:-
I live in Greater Brisbane (Logan CIty actually, where we do enjoy lower prices than many other LGA’s in SEQ).
I commenced recording my petrol usage in Feb 2018. At that time, petrol prices were $1.17/litre.
Over the next (nearly) four years, we saw prices as high as $2.00/litre and as low as $0.87/litre. Currently, the average price in Brisbane is $1.46
BUT, by using shopper dockets and selecting the lowest priced servos to fill, and minimising any top-up amounts while prices are high, my average petrol cost over that time has been $1.20/litre. Compare that with my Feb 2018 figure, and you’ll see it has been worthwhile.
Sure, it is a little more effort – emptying jerrycans into the car when prices are high, and travelling a little further to get a great price. A cent or two isn’t worth travelling for, but to save 14c I’ll drive a few Km.
What can YOU do? Simply by checking out that website, who knows – you may save 10c/litre quite easily, and regularly !! (Do note that some states don’t work the same as others, but the graph on petrolspy will tell you how your State works.
At last – it seems some common sense might have forced its way to the front. Following days (weeks?) of stupidly long lines of cars as people flock to get PCR tests, yesterday’s National Cabinet meeting seems to have found some common ground. Hallelujah !! Seems most States are now in line, or soon will be, with the new definitions that Omicron has brought about. i.e. Though a far more contagious disease, Omicron is also far less deadly as recent numbers seem to bear out.
Yesterday on radio I was hearing that Omicron variant is akin to a severe “common cold” – i.e. a nuisance, but hardly life-threatening for those who are vaxxed. Based on Qld’s recent numbers (something like 8000 new cases over the last two weeks, but just two people in intensive care) it may be that even the unvaxxed will be far less troubled by this variant.
But the BIG news to me was the re-definition of a close contact, along with the exhortations to NOT get a PCR test unless:-
a. you are a close contact of someone who has Covid (and the new “close contact” means you either live with them, or spend more than four hours daily with them – as a care-giver, or perhaps a workmate?). Or
b. you have definite symptoms of Covid.
So, no more lining up for a PCR test just to get into another State, or because your own State Govt has asked you to “get tested”. It seems the latter has gone away with this recent Cabinet meeting. Maybe now we can stop quarantining so many folk unnecessarily, which has led to shutting down so many small businesses.
I live in hope, but this new Covid approach DOES sound more hopeful than what has been up to now. Perhaps 2022 will be a good year after all !!! :)
Happy New Year to all,
Benny
Hi Steven,
A good thoughtful post – well done. I agree with everything, and readers can add another point that comes into play too – the fact that if a tenant left, with a $2M property, you have lost 100% of your income (likely with a mortgage still to pay). But with 4 x $500k IPs, losing a tenant means a 25% drop in your income instead of 100% drop.
Then again any change in circumstances ( with you, a local council, or one particular area ) might impact the ability to hold that property. (e.g. a local catastrophe might send a suburb’s desirability into a tailspin). If that suburb holds your “one and only” IP, much pain for you. But if you’re holding 4 IPs (likely in several suburbs) your path would hopefully be less rocky.
Despite my recent post that quoted Warren Buffett (“Diversification is protection against ignorance. It makes very little sense for those who know what they’re doing.”), I agree with you that it makes sense to have diversification in some cases. Your post provides a catalyst for discussion around this complex subject.
It would be great to hear from others on this (especially from the opposing side).
Regards,
Benny
I feel & hear civil unrest building which could explode at any time.
Hmm, even our Parliaments have more than their share of “civil unrest” right now. The division we are facing seems to be across the board. Is this how the West finally crumbles? They say “Divide and conquer”, and I haven’t seen such division within our country in decades. Many of those who have been vaccinated are siding with those who choose not to vaccinate, as Govts impose restrictions on the “unvaxxed”.
There seems to be a huge gulf between the parties (the “vax or be damned” vs the “I have the choice to not vax”), each with strongly held views – and I’m not sure just how this will all end. There even seems to be a “State Govts vs Fed Govt” war at the moment – like, we need this? Leadership is what is needed. Where is a modern-day King Solomon when we need him?
Benny
Two years on and things keep changing – and also staying the same (with thanks to Jean-Baptiste Karr) around the subject of Climate Change. The “world” is right now meeting for a gabfest in Copenhagen around the subject of CO2 emissions and setting goals to reduce our emissions to zero (if that is even remotely possible).
Meanwhile, some cooler heads around this subject have changed their website layout, so a change was made to their (initial) 12 videos that schooled us on the various subjects that make up “climate change”. They now have 22 videos, so old links became invalid. But don’t worry – click the link below for their latest words of wisdom that offer hope, and much more LIGHT, on the whole subject, rather than the heat that many other sources provide. Happy reading!
https://www.propertyinvesting.com/topic/5050126-the-climate-is-changing-2/#post-5060671
Benny
Hi Travis,
As Terry has pointed out, there are many things to consider in such a move (i.e. keeping the old PPOR as a rental). For sure it can be done, but is it advantageous to do it? Or is it more advantageous to sell with NO CGT to pay, so you can put all (or some?) of that freed-up cash down as a deposit on the new home? Again, there are many things to consider there too (with such low interest as we have today, is it better to own the new one with as little debt as possible, or instead, keep spare cash and take out a larger low-interest loan?). If you kept the other home, then the extra Income might help to pay for the new one, but (as you say) the borrowing against the old PPOR WON’T be tax-deductible unless the borrowing is for another investment (and a new PPOR doesn’t count).
Have you been using an Offset account at all? If not, DO read up on them, as they might help to chart a better path into your future. In short, you can pay down a mortgage, yet still have it all available if required. Certainly, it is good that you are asking while there is time to formulate a plan. Keep asking questions around this subject, read up more, meet with your adviser(s), then come back with more thoughts/questions for us. By putting your back to the wheel now, you can surely find the best way forward FOR YOU !! And welcome aboard, too,
Benny
Hi Tony,
I really like the first two, and the third is an extra lift with the humour. Good stuff.
Benny
After 18 months of pain, it seems several State Govts are getting serious about the economy, small business and family welfare once more – i.e. they are saying “It’s time to open up again”. Sounds good, except for what seems like being a kind of apartheid that may be coming – i.e. that all those who haven’t decided to get vaccinated will belong to a different “class” with fewer privileges than the rest.
Even Qld (with no Covid to speak of over these last 18 months) are talking of “opening up” on Dec 17th 2021 – come hell or high water. That’s quite a change from their previous locking down of the border – not even letting Qlders home in many circumstances. The stories have been vast, sobering, and (in many cases) quite disappointing, as we hear of families kept apart for months, people going interstate to visit a family member who may be sick or dying, then can’t come home to Qld again. But yesterday the Qld Govt message changed markedly – it is Dec 17th at the latest (maybe earlier if an 80% double-vax figure is achieved) and our border will open to ALL !!
Scarey? Well, it will be quite a new thing for Qld. NSW and Vic have fought high Covid numbers and have battled to overcome them. Qld has yet to face that outcome. And, perhaps the scariest thought of all, I wonder just what poor decisions might come once we are “open to the world”. Will things get so bad so quickly that the best thought from the State Govt will be to run to the safety of “what worked before” – i.e. close borders and lockdown? With tourism one of Qld’s largest income producers, such a knee-jerk move would likely be the death knell of many small businesses who have been hanging on by their fingernails.
Sharp lockdowns following on from “opening up” are the worst decision. Think about it – businesses hear of the “opening up”, they rush around spending time and money to prepare for their business to re-open, get staff back on deck, stock up, open up for business, then have everything fall in a heap as they are locked down again two days later. What a massive effect this has had on accommodations, restaurants, flights, the wedding industry, small shops, you-name-it.
Ever-changing rules drive the hoi polloi nuts !! I only hope that, come Dec 17th, that the Qld Govt has taken a teaspoon of cement and hardened up so that their decisions don’t blow around in the Covid wind.
How is YOUR State Govt travelling? And your constituents?
Good luck to us all,
Benny
Sure thing – google the Office of State Revenue in Qld and all should be revealed. Your accountant should still be a good path too though, in case you don’t read far enough !! ;)
